New Delhi, October 13: If you have been wondering whether your Diwali shopping would come with a new UPI charge attached, you can relax for now. The National Payments Corporation of India (NPCI) said on Tuesday that the merchant fee on larger UPI payments will begin only after Diwali, and not on October 15 as planned.

The call was made by the UPI and Services Steering Committee. It comes after days of talk that the rollout might be pushed back, and it will be welcome news for shopkeepers heading into the busiest weeks of their year.

“Keeping in mind the festive season,” the NPCI said, the Merchant Discount Rate (MDR) on select person-to-merchant (P2M) UPI transactions “shall be implemented immediately post Diwali at a date to be notified separately.”

First, what is MDR?

Think of it as a processing fee. When you pay a shop through UPI, the shopkeeper is the one who may have to pay a small charge to the banks and payment companies that make the transaction happen. That charge is the MDR.

Under the proposed plan, merchants would pay 0.4 per cent on P2M payments above Rs 2,000, with a cap of Rs 300 per transaction on high-value payments. For essential and thin-margin sectors such as railways, telecom, insurance, fuel and farm inputs, a flat Rs 5 per transaction would apply on payments above Rs 2,000.

None of that has changed. Only the start date has moved.

What won’t be touched

Most of what people do on UPI every day stays free:

• Paying a merchant up to Rs 2,000
• Sending money to family and friends
• Payments received by small merchants and street vendors, up to Rs 1 lakh a month through UPI QR codes, which keep zero MDR

So the chai seller, the vegetable vendor and the neighbourhood kirana are not in the firing line.

Why it was put off

Merchant groups, fintech companies and payment firms had been asking for more time. Their worry was simple: a new charge appearing right when festival sales begin could unsettle customers and sellers alike. They also pointed to confusion over differing MDR rates and how they would apply across various types of UPI payments.

Earlier reports had suggested the fee could slip all the way to January 1. The NPCI’s wording points to a much shorter wait, with the fee starting soon after Diwali.

So, what should you do?

For now, nothing. If you are planning a big festive purchase, such as a phone, jewellery or furniture, paying through UPI will not trigger MDR for the merchant until the new date comes into effect. The framework is also not meant to charge individual customers directly, though it will be worth watching how businesses handle the cost once it begins.

The NPCI has not said when exactly the fee will start. The date will be announced separately, and until then UPI payments to merchants remain free of MDR.

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